AZ looks to cancer drugs as Crestor nears generic cliff

Facing US generic competition to its cholesterol drug Crestor next week, AstraZeneca is cutting costs and pinning its hopes on a wave of new cancer drugs.

In a Q1 results statement AstraZeneca said guidance for full year 2016 remains unchanged, with the company forecasting declining sales and earnings per share, mainly stemming from the Crestor patent expiry.

The company also spent money on acquiring ZS Pharma and a stake in Acerta pharma last year, but is hoping these investments will pay off by producing many more new products.

The company's well-stocked pipeline was the main part of CEO Pascal Soriot's argument for independence when it successfully staved off a takeover bid from Pfizer in 2014. Soriot set the company a target of $45.2 billion in sales by 2023, double its estimates for 2017 - a target the company remains commmitted to.

AZ said it is to cut back on commercial and manufacturing operations, resulting in a $1.5 billion restructuring charge, in addition to a $2.4 billion charge relating to cuts for 2016-17 that has already been announced.

The company expects revenues to be boosted by income from drugs it has sold or licensed to other companies, from which it receives milestone payments if the medicines meet clinical or commercial goals.

In Q1 alone, this "externalisation revenue" increased 78% compared with last year's Q1, to $550 million.

But AZ's strength lies in its pipeline and a range of cancer drugs under development, including Lynparza (olaparib) pill, which is already approved in the EU and US for ovarian cancer with a BRCA mutation.

More Lynparza filings are due in gastric cancer, breast cancer and two other ovarian cancer uses in the first half of next year. At the same time AZ is also due to file its durvalumab immuno-oncology drug in head and neck cancer. However it will face especially stiff competition in this indication, as immunotherapy frontrunners, Merck's Keytruda and BMS's Opdivo have already demonstrated strong data in these hard-to-treat cancers.

The company also expects to file its acalabrutinib in blood cancer in the second half of this year in the US. Outside of cancer, AZ expects filings in US and EU for benralizumab in severe asthma this year.

The US Food and Drug Administration approved lung drug Bevespi Aerosphere earlier this week and a filing is due in Europe later this year.

AstraZeneca unveils genomics collaboration to aid drug discovery